FOREX-Dollar boosted by Citi results, but fears linger

* Dlr rises as Citi reports smaller-than-expected loss

* U.S. currency also benefits from sterling's losses

* Broad dlr sentiment still clouded by financial system woes

* Euro capped as Trichet notes risks to growth

(recasts, changes byline, adds quotes, updates prices)

By Veronica Brown

LONDON, July 18 (Reuters) - The dollar rose versus a basket of six major currencies on Friday, boosted after Citigroup (C.N: Quote, Profile, Research, Stock Buzz) reported a smaller-than-expected second quarter loss, calming some jitters on U.S. financial sector health.

Citi, the biggest U.S. bank, reported a second-quarter loss per share of $0.49, smaller than forecasts of around $0.61-67. It took credit costs of $7.2 billion, lighter than some estimates of around $9 billion.

As well as injecting fresh impetus into the dollar, the results saw stock markets move into positive territory and European government bonds hit session lows, with financial sector sentiment soothed slightly by some forecast-beating earnings this week.

"As far as the tone in the equity market is concerned, results in the financial sector were not as bad as expected which has provided the dollar with some support," said Ian Stannard, senior currency strategist at BNP Paribas.

The dollar also benefited from sharp falls in sterling after the Financial Times reported the UK Treasury is working on plans to change its fiscal rules.

This could effectively give it more leeway to increase borrowing as a way of mitigating the effects of anticipated economic slowdown. See [ID:nL17632891].

By 1112 GMT, the dollar index, which tracks its performance against a basket of six major currencies, was up 0.2 percent at 72.184 .DXY, but still within sight, however, of the record low of 70.698 hit in March after the Federal Reserve coordinated JP Morgan Chase's takeover of Bear Stearns.

Sterling was down 0.3 percent at $1.9949 <GBP=>, even though the UK Treasury dismissed the FT report as "pure speculation."

The euro fell 0.1 percent to $1.5838 <EUR=>, and the dollar was up 0.3 percent against the yen at 106.63 yen <JPY=>.

U.S. stock futures were called to open higher SPc1NDc1DJc1, while European stocks rallied to trade up 0.4 percent on the day .FTEU3.  Continued...